GRIT Partners
Insights

Among the Most Compelling Opportunities
Reside Within Private Real Estate Debt

"Successful participation within private real estate debt requires patience and education in tandem with experienced, disciplined execution."

The Market Dislocation

A Structural Event,
Not a Market View

$4.2 trillion in commercial real estate loans are maturing between 2024 and 2027. The majority were originated at interest rates of 3–4%. Refinancing today costs 6.5–8% or more. Many borrowers cannot bridge that gap.

Simultaneously, the traditional providers of CRE capital are retreating. Bank lending activity has fallen 58% from pre-pandemic levels. Basel III capital requirements and post-2023 regulatory scrutiny have made this retrenchment structural, not cyclical.

$4.2T
CRE Loans
Maturing 2024–2027
$116B
Current
CRE Distress
10.3%
CMBS Special
Servicing Rate
58%
Decline in Bank
CRE Lending
Investment Strategy

Dual-Channel Approach

Fund I operates across two complementary strategies that share the same underwriting infrastructure but capture different return profiles — targeting 18–24% net IRR with a 30–45% equity cushion at entry.

01
Distressed Debt Acquisition
60–70% of Capital
Acquire sub-performing and non-performing senior secured loans at 55–70% of unpaid principal balance from motivated sellers — primarily regional banks under regulatory pressure. Each acquisition provides an immediate equity cushion, current yield of 8–12%, and multiple resolution paths.
02
Bridge Originations
30–40% of Capital
Originate senior secured bridge loans in the $5–30M range to borrowers underserved by retreating banks. Targeting 10–12% yield with 60–70% LTV and 14–21 day execution. This channel provides steady current income and surfaces distressed acquisition opportunities.
Risk Architecture

Five Layers of Protection

Capital preservation is the structural starting position of every investment. The risk framework is designed so that multiple things can go wrong — and the fund still makes money.

I
Senior Secured Position
Every investment sits at the top of the capital stack with first-priority claim on the underlying real estate.
II
Purchase Discount as Equity Cushion
Acquiring loans at 55–70% of unpaid principal means the underlying property would need to lose 30–45% of its already-distressed value before the fund takes a loss.
III
Current Yield Reduces Duration Risk
The fund earns 8–12% current yield while holding positions — generating returns from day one rather than depending entirely on a future exit event.
IV
Multiple Exit Paths
Each loan in the portfolio has four or more resolution paths. If one path closes, others remain available. This optionality is the structural advantage of credit over equity.
V
Growing-Market Collateral
Every loan is collateralized by real property in markets with verified demand growth. The Carolinas' demographic tailwinds provide a natural floor on property values.
Social Impact

An Additive Thesis,
Not a Concession

When the fund acquires distressed apartment loans at 55–70 cents on the dollar, the discount creates sufficient margin to achieve institutional returns while maintaining rents 10–15% below market — preserving naturally occurring affordable housing for workforce households without government subsidy.

7.1 Million
The United States is short 7.1 million affordable rental homes. Distressed multifamily debt acquisition is one of the few strategies that can address this crisis at scale while generating 18%+ net IRR.
Source: National Low Income Housing Coalition, 2025

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